Hanover wants out of Tower

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Too bad for the Kiwis, but nobody's really keen to take the pile off Sir Eric's hands.

Despite protestations that it thinks trans-Tasman insurer Tower is undervalued, Kiwi entrepreneur Sir Eric Watson's Hanover Group is believed to have been hawking its 9.5 per cent stake to institutions last month, but without much luck.

That might explain the disappointing share price performance before last week's improved Tower results: the stock was under $1.30 in mid-May before recovering in the wake of the result to yesterday's $1.44.

There might be several reasons why Hanover is a seller, one being it has no board representation or influence on the company. Sir Ron Brierley's Guinness Peat Group, with 19.4 per cent and three board seats, calls the shots.

Hanover is also one of the few investors making money on its Tower investment.

Also, another of Sir Eric's big investments, NZ retailer Pacific Retail, is having some problems following its acquisition of UK retailer Powerhouse.

Pacific Retail last week reported a loss of $NZ22.6 million ($20 million) for the year to March 31.

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Plod pulls ginseng float

It looks as if the $11 million Ausforest offering is the latest on the growing pile of pulled floats.

Ausforest chief Allan Mason confirmed yesterday the float of the agricultural concern had been "deferred" after the corporate gumshoe stepped in.

"The Australian Securities and Investments Commission has obtained interlocutory orders in the Federal Court in Sydney against Heydon Park Ltd, a wholly owned subsidiary of Ausforest Ltd, preventing it promoting, accepting or issuing interests in its managed investment scheme for the growing and harvesting of ginseng in Tasmania," the regulator stated.

Ausforest had lodged a prospectus offering 13.75 million shares at 80c a share to raise $11 million - based on this issue price it would have a market capitalisation of $31.3 million.

ASIC alleged that certain promotional material issued by Heydon Park "misrepresented the true nature" of a Singapore company, Panax Ginseng Wholesalers, which was to be an important customer of Ausforest.

"ASIC alleges that company documents and financial returns filed with the Singapore Registry of Companies and Businesses reveal that Panax Ginseng Wholesalers is not an established commodity trading company but a company controlled by Mr Allan Mason that has no record of ever having traded."

The matter returns to the Federal Court in Sydney for directions on June 4.

The good folk at Macquarie Bank's private equity arm, which bought into the business in 1994 and held a 67 per cent stake, closed the $44.1 million offering "oversubscribed" ahead of today's listing.

Applicants even had their share allocations scaled back, proving there's some life left in the float market.

Macquarie's raked in $30 million for its 10-year investment while the Reject Shop's management, former management and entities associated with co-founder John Shuster stand to gain a combined $12 million by selling down their holdings.

On a similarly positive note, Patersons were busy raising $40 million for mining contractor Henry Walker Eltin at 84c a share yesterday.

With the stock suspended, the price represents a 16c discount to last week's $1 closing price.

Sources close to HWE said institutional demand for the stock was solid.

Strathies a target?

Is it because June 30 is less than a month away that the takeover rumours are reaching new highs - or something more substantial?

Busy trade late last week in Strathfield Group, when its shares reached a year's high of 15c, has prompted speculation that it is a potential target for Gerry Harvey's Harvey Norman.

While the stock closed unchanged at 14.5c on small turnover yesterday, and Harvey was, rarely, unavailable for comment, the rumour is still live.

Strathfield's founder Andrew Kelly has about 30.5 per cent of the company while car dealer Rick Damelian last October signed a $4 million loan, paying out the National Australia Bank and helping the company stock up for Christmas. A slight dip in the Woolworths share price prompted yet another bout of speculation that chief Roger Corbett may be eyeing Foodland in general and its New Zealand show in particular.

Once again, the rumour involves Woolworths moving to prevent a possibly unpleasant, for Woolies, merger of Foodland with Metcash.

A more prosaic explanation for the share price fall - down 9c to $11.71 - is an overhang from index-related selling on Friday. It seems CFS Gandel Retail Trust is on the verge of signing its $80 million-plus acquisition of the Fox Studio complex.

The joint owners, Lend Lease and News Corp, have written down a bundle on the ill-fated entertainment complex and seem happy to sell but it has taken since last October.

Retailers trying to lease space in the profitable Fox Studios food/cinema arm have been told that all deals are on hold until the sale is complete.

More Cyberstink for Zig

Telstra is coming clean about the extent of the trouble at its Asian joint venture with Pacific Century Cyberworks, Reach, backing away from claims that no further funding will be required.

The people's telecom may also be in a position to reveal the extent of the damage sooner than expected.

Talks with the banking syndicate responsible for Reach's $US1.2 billion ($1.67 billion) debt are expected to continue this week with a timetable that could see an agreement reached within the next month, according to one banking source.

Analysts are now backing up forecasts of more woe for Reach's parents with figures that detail the extent of its problems. According to ABN Amro's Justin Cameron, data pricing fell another 70 per cent over the past year, with capacity utilisation across the industry below 20 per cent.

The firm said that Reach's earnings before interest, tax, depreciation and amortisation would plummet by almost two-thirds to just $US86 million in this financial year, ending December 31.

Its interest bill, by comparison, is expected to rise slightly to $US91 million.

Credit Suisse First Boston is forecasting that Telstra will write off its $US143 million capacity pre-payment to Reach this financial year but ABN Amro is predicting the final bill for Telstra will be between $400 million and $500 million.

The rescue is expected to prove even more costly for the Telstra boss, Ziggy Switkowski, already under pressure since the departure of his chairman, Bob Mansfield.

CSR's hidden charms

While a sour sugar price continues to weigh down CSR, Citigroup Smith Barney has upped its 2005-06 earnings forecasts on the shares, citing "substantial value within CSR hidden from investors which could be unlocked over the medium term".

For one, Citigroup reckons CSR could save $23.5 million alone just by cutting costs in its brick plants. The bank estimates that about 60 per cent of CSR bricks cost double the industry benchmark of $150 per one thousand to produce.

On top of this, Citigroup reckons CSR could save $15 million each year from improvements at its recently commissioned Rosehill roof tile plant. In all, the broker sees around $39 million costs cuts by 2005-06.

Then there is the $200 million in redeveloping ex-quarries, such as CSR's 20 per cent share in the Penrith Lakes.

But the real clincher could be if CSR wins a lawsuit against 60 insurance companies over asbestos liabilities. There is speculation the nine-year suit could be over with the next 12 months and Citigroup reckons CSR stands to gain up to $180 million.